Icons & Innovators: The Boys from Brazil
In 1995, Maurício Botelho embarked on a suicide mission. The engineer had been tapped to save Empresa Brasileira de Aeronáutica, a small, dying aircraft manufacturer in São Paulo, Brazil. The company—which went by the acronym Embraer—had lost $330 million the previous year, and the causes of its imminent death were numerous: The aerospace industry as a whole was in a deep slump, because defense departments throughout the world had responded to the end of the Cold War by slashing their budgets for new aircraft; misguided government policies nearly had destroyed Brazil’s economy; and turboprops, the type of planes that Embraer made, were losing favor to faster, quieter jets. It seemed only a matter of time before Botelho would have to fire his employees, shut down the operation, and look for another job.
Thirteen years later, Embraer is the world’s third largest commercial aircraft manufacturer, after Boeing and Airbus. It has more than 20,000 employees and an order backlog worth more than $17 billion. Over 10 percent of that sum reflects orders for private jets, which the company began delivering only six years ago. Embraer currently has three private aircraft in development, and it probably will announce more soon. Needless to say, Botelho kept his job.
Luis Carlos Affonso is having a hard time appearing calm. Embraer’s executive vice president for executive jets, a slim, silver-haired, patrician 47-year-old, is a reserved man. But today, during September’s National Business Aviation Association (NBAA) conference in Atlanta, his new boss, CEO Frederico Fleury Curado, seems on the verge of approving the launch of one—and perhaps two—new business jets. If Curado harbored any reservations before the show, the sight of people mobbing the company’s new mock-up for those planes undoubtedly is easing his concerns.
A few minutes earlier, with some ceremony, Curado and Affonso had unveiled the mock-up, revealing the cabin for two new models—a "Mid-Light Jet" (MLJ) and a "Mid-Size Jet" (MSJ)—each of which would occupy a spot between Embraer’s upcoming Phenom 300 light jet and the company’s first business jet, the super-midsize Legacy 600. Embraer has not named these aircraft yet, but it recently trademarked the names "Legacy 400" and "Legacy 500," helping to end speculation among some wags in the press that the planes might be called "Phlegacies" or "Legnoms."
At the NBAA show, Embraer claims that it merely is soliciting customer feedback concerning the MLJ/MSJ concept, but no one here believes that the company will not proceed with developing at least one of these planes. During a private moment following the unveiling, Affonso hints that a decision will come soon. "We intend to be a major player in the private jet market," he says. "That means giving customers an option no matter what their size needs are, so they will always stick with us."
Like the Phenom 300, Affonso points out, the MLJ and MSJ each would have the largest cabin in its class, as measured by overall volume, as well as by width and headroom. Affonso also notes that the cabin will have a flat floor, "which you will not find in any other airplane in this segment." Both planes would have maximum speeds of about 600 mph. The eight-passenger MLJ would be comparable in size and capabilities to the Cessna Citation XLS+, Bombardier Learjet 45XR, and Hawker 750, all of which are priced in the range of $11 million to $12 million. The nine-passenger MSJ would be in the same class as the Gulfstream G150, Learjet 60, Cessna Sovereign, and Hawker 900XP, which cost $13 million to $16 million each. The MSJ’s 3,450-mile range, Affonso says, is "true coast-to-coast with eight passengers, whereas a majority of our competitors can only do that with four."
Embraer has not announced prices, but it has begun taking refundable deposits for the two planes: $70,000 for the MLJ and $90,000 for the MSJ. If Curado approves both concepts, Embraer could begin deliveries by 2012.
Assuming he receives the go-ahead, Affonso will have an astonishing five aircraft in development. Embraer’s very light jet, the Phenom 100, flew for the first time last year, and deliveries should begin this summer. Production of the light Phenom 300, which the company announced in 2005, will follow the first Phenom 100 deliveries by about a year. Embraer also expects to begin delivering a very large, long-range craft, the Lineage 1000, this summer.
Even with the addition of the MLJ, the MSJ, or both, Embraer still will have a large gap between the super-midsize Legacy and the Lineage. Affonso waves his hand with mock weariness when asked if the company plans to bridge that gap. "Please, we have enough to think about," he says. "But yes, that’s something we will address. It’s on our radar."
Affonso recalls when times were not so pleasant at Embraer. He joined the company in 1983 as a young aeronautical engineer freshly minted from Brazil’s Instituto Tecnológico de Aeronáutica (ITA). At the time, the firm was selling the Brasilia turboprop airliner, the Tucano military reconnaissance aircraft, and the AMX fighter jet. All three of the planes were well regarded, but the oil crises of the late 1970s had hurt aircraft manufacturers worldwide. In addition, airline customers were beginning to complain about turboprops, which they increasingly perceived as uncomfortable, noisy, and dangerous.
In 1989, Embraer executives, hoping to drum up sales for the Brasilia, traveled to the United States and met with Robert Crandall, then the CEO of American Airlines. During the meeting, Crandall offered belated but prudent advice. He suggested that Embraer begin building jets—not big ones, but aircraft with 50 or so seats that could replace turboprops for regional flights. Crandall believed that this market held huge potential for airlines, and he hinted that if Embraer produced such a plane, his company would be the first customer.
The executives took the advice. Ultimately they transformed the company’s 65.5-foot EMB 120 turboprop into a 45-seat jet called the ERJ 145. But various financial crises delayed the jet’s introduction until 1995—the same year that Botelho became Embraer’s CEO, and a year after the company had been privatized.
By the early 1990s, government bureaucracy, poor business decisions, and a series of failed financial initiatives by the administration of President José Sarney (1985–1990) had brought the company to its knees. Under new president Fernando Collor de Mello, as part of an overall recovery plan for the country, many state industries were sold to private investors. The group that purchased Embraer recruited Botelho to try to save it.
A compact, charismatic man given to booming greetings and crunching bear hugs, Botelho proved to be a supersalesman. The company’s ranks had shrunk from a high of 12,600 employees to about 3,200, and these survivors were suspicious and bitter. But, partly by taking a pay cut himself, Botelho convinced the workers to accept more layoffs, as well as salary reductions. He vowed that he would rebuild the workforce as soon as the company’s performance improved. And then he invested huge sums in the ERJ 145 program. Within a few months of the aircraft’s launch, it became Embraer’s best seller, prompting Botelho to shift the company’s focus from turboprops to regional jets.
The leader of the 145’s development had been a fellow named Luis Carlos Affonso. Botelho made him the company’s chief engineer.
Affonso is a product of a Brazilian aeronautical tradition that some might find surprisingly long. Alberto Santos-Dumont, a young man from the state of Minas Gerais, flew a hydrogen airship in 1898, two years before Count Ferdinand von Zeppelin accomplished that feat. In 1901, Parisians watched in amazement as Santos-Dumont piloted his airship around the Eiffel Tower. And in 1906, in France, he flew about 200 feet in a plane of his design; the Wright brothers had made their first flight at Kitty Hawk only three years earlier.
The São Paulo monoplane, the first airplane made completely in Brazil, flew in 1910, and the country’s first production aircraft, the Muniz M-7 biplane, was introduced in 1936. Captain Antonio Guedes Muniz, who designed that plane, believed Brazil should build an aeronautical industry, not only for military purposes but also to help modernize the country. The Brazilian government agreed, and by the 1950s it had established a technical institute, the ITA, to train the required talent.
In the mid-1960s, a group of ITA undergraduates received a commission from the country’s Ministry of Aeronautics to design an aircraft. With the help of French engineer Max Holste, they created a turboprop that flew for the first time in 1968. A year later, the government founded Embraer to produce that plane, called the Bandeirante. Embraer created other aircraft as well, including the Xavante fighter jet. (Today, the company continues to build military aircraft, mainly models suited for surveillance missions.) The Bandeirante remained Embraer’s most popular plane until the Brasilia—and, following that, the ERJ 145 regional jet.
Throughout this period, the ITA fed Embraer a steady stream of designers and engineers, among them Affonso. He figured prominently during the company’s rebirth, which included the development of aircraft called the E-Jets. These currently consist of a family of four narrow-body, twin-engine, medium-range jet airliners: the Embraer 170 and 175 base models, and the Embraer 190 and 195 stretched versions. The E-190, a 119-foot craft that first flew in 2004, formed the basis for Embraer’s upcoming Lineage 1000 private jet, and the Legacy 600 is derived from the ERJ 145.
Embraer delivered its first Legacy 600, a $25.5 million aircraft, in 2002, three years before Affonso took charge of the business jet division. (His team has made several enhancements to the plane since then, including a new interior with a three-place divan, Wi-Fi capability, and two flat-screen monitors.) Like other Embraer private jets, the 600 features the largest cabin in its class: 1,410 cubic feet, sufficient to accommodate 16 passengers comfortably.
With the palatial Lineage 1000, Affonso transformed a cabin designed for about 100 people into one for fewer than 20. The jet’s 4,085-cubic-foot interior comprises five different zones, each of which can be outfitted as a lounge, work center, dining room, bedroom, meeting room, or entertainment center. The aircraft, which will sell for about $43 million with its interior installed, will fill a niche between the larger and more expensive Boeing Business Jet and the smaller Gulfstream G550 and Bombardier Global Express XRS. Its 4,830-mile range enables it to fly nonstop from New York to Europe and from Europe to the Middle East.
Embraer points to luxury and comfort as the main selling points for even its smallest private aircraft. At $3 million, the five-passenger Phenom 100 is among the most expensive of the existing and upcoming very light jets (VLJs): The HondaJet, due in 2010, is more costly at $3.65 million, but most other VLJs, including the $1.6 million Eclipse 500 and the $2.4 million Cessna Citation Mustang (both now in production), sell for considerably less. But Affonso notes that the Phenom 100’s clean, minimalist interior design and large windows lend a sense of spaciousness to its cabin, which already, at 282 cubic feet, is unusually large for a VLJ. (By contrast, the Eclipse 500’s cabin measures 160 cubic feet.) The cabin of the $6.65 million, seven-passenger Phenom 300 will measure 325 cubic feet, and both aircraft will have impressive top speeds (520 mph for the 100 model, 578 mph for the 300) and flight ceilings exceeding 40,000 feet.
Embraer’s success stems partly from a massive training program that Botelho instituted shortly after joining the company. At age 26, Botelho took a job building a sawmill on a remote island in northern Brazil. "There was nothing around," he later recalled. "So we built a school." He noted how children rowed long distances in canoes to come to class and how their actions taught him a lesson. "If you give people an opportunity," Botelho concluded, "they will take it."
He brought that understanding with him to Embraer, where he spent more than $100 million on a training program that, over the last decade, has produced more than 600 master’s-level engineers. He has created a system, Botelho notes, that is efficiently producing Embraer’s next generation of leaders.
One member of that generation is 46-year-old Frederico Fleury Curado, whom the 64-year-old Botelho named as his successor last spring. Curado, who most recently worked as Embraer’s vice president for commercial aviation, has been with the company since 1984. Unlike Botelho, he does not engage in bear hugs; he is a circumspect, highly efficient production man. It appears that Botelho, sobered by Embraer’s vast order book, decided that the company needs a supersalesman less than it needs someone to move the products out the door.
At the NBAA conference, following the unveiling of the mock-up for the MLJ and MSJ planes, Curado steps to the podium. "Our biggest challenge now is execution," he says quietly. "Right now you see ideas, mock-ups. But in the next couple of NBAA meetings, you’ll see not mock-ups but real planes. We have made a lot of promises, and now it is time to deliver on them."
And what about that jet between the Legacy and the Lineage? Will Embraer deliver that, too? If it does, what will it be called?
Perhaps the Linacy 800?
Embraer, 954.359.5387, www.embraercorporatejets.com
Embraer is well on its way to creating a complete line of private jets, from a spacious very light jet to an ultralarge aircraft with cross-Atlantic capability. Following are the specs, projected specs, and projected initial delivery dates for each of those aircraft.
very light jet
medium light jet
super mid-size jet
282 cubic feet
325 cubic feet
1,410 cubic feet
4,085 cubic feet